France Telecom Suffers Sharp 2006 Profit Drop

Reuters

Tuesday, 6 Mar 2007 | 6:38 AM ETReuters

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France Telecom posted a sharp drop in 2006 profits on Tuesday, hit by restructuring and falling prices in top markets, but fuelled speculation it was saving up for acquisitions by keeping its dividend stable.

The operator, which trades mainly under the Orange brand, the name of its original mobile business, reported a net profit of 4.139 billion euros ($5.44 billion) for the 12 months to Dec. 31, down from 5.709 billion in 2005.

The outcome included restructuring costs of 567 million euros and an impairment charge of 2.8 billion euros, mostly related to a drop in the value of its struggling U.K. mobile business.

Overall, analysts said France Telecom's results, part of which were published on Feb.1, lacked sparkle.

Pellissier declined to give a sales forecast for 2007.

"We are not giving sales guidance... The only element we are giving is that we should see very moderate growth, which means at best the same level as in 2006...On the basis of trading today, we cannot assume a strong return to growth," he said.

In July, France Telecom scrapped its 2% underlying sales growth target for 2006, as price competition, regulatory pressure and Internet telephony rose much more than foreseen.

On a comparable basis, revenues in 2006 rose 1.2% to 51.702 billion euros.

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